What are defined contribution retirement plans? I'm sure you've heard of some of the most common used terms for defined contribution plans such as the 401(k)s, the 403(b)s, the 457's, and the "Thrift Savings Plans" or TSP's. These retirement plans are offered through the employer as a way you can save for your retirement. Technically speaking they are "sponsored" by the employer.

The main reason these plans are called "defined contribution retirement plans" is because you are the one contributing your own money into them. This does not necessarily mean you are the sole contributor to the plans. Often employers will match a certain percentage to let's say a 401k plan.

The breakdown is as follows:

• 401k's are classified as contribution plans offered by companies and corporations to their employees. By far this is the most common of the plans. Another subgroup to the 401k is the roth 401k which has a different tax treatment.
• 403b's are often set up for teachers, staff of public education, nonprofit organizations, nurses and hospital workers.
• 457s are setup for state and municipal employees. Examples include judges, police officers, firefighter, and sometimes for employees of qualified nonprofit organizations.
• Thrift Savings Plans also called "TSPs" are designed for federal employees such as postal workers.

Participation in 401k's plans are the highest; therefore you will often hear about them and may understand them better than the other three. Once you leave an employer, you have the right to rollover your 401k's, 401b's, 457's, or TSP.